COVID19 – an opportunity for decision makers to know how African food markets function

African countries are called less industrialized economies for genuine reasons. If the majority of people in a country depend on more than 80 agricultural commodities and less than 10 can be turned into processed products, such a country is obviously less industrialized. For instance in Zimbabwe only maize meal, flour, sugar, wheat flour, magarine, tomato sauce, baked beans, milk and beer are some of the few processed products. It just shows agriculture and food cannot be considered an industry and commerce thing but a food systems domain under the ministry of agriculture especially during uncertain times characterized by pandemics like Corona virus.

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Besides absence of processing and value addition technology in most African countries, the nature of most African foods makes industrial processing a non-starter.  What processed products can an African country produce from okra, magaka eminzwa, beetroot, tsvubvu, nyii, nzimbe, nzungu nyoro, nyimo nyoro, madhumbe, sweet potato, mazhanje and many other diverse commodities that are part of seasonal African food systems?  Such food have to be consumed or nutritionally used in a fresh and raw state.

Using mass markets to ensure food supply during uncertain times

During times of crisis like the current Corona virus that has spread across the world like wildfire, securing food systems should take a granular view of local reality and recognize the fact that mass markets are still the backbone of African food supply chains and systems. To that end, countries that decide to declare a 21 day lockdown should carefully think about food supply and demand pathways during and after the lockdown.

While manufacturing has an important role, it is not yet the backbone of most African food systems. Relationships and trust are the bedrock of African mass markets and have enormous influence on food availability as well as price setting. It is not just about forces of supply and demand but sometimes food travels through kinship-based relationships, among other avenues. That is why it is important that as part of understanding the supply chain, decision makers become aware of different contractual arrangements through which food moves from farm to fork.

Contracts between mass markets and smallholder farmers

The following are major types of contracts in African mass markets like Mbare in Harare and others:

  1. The farmer just comes to the market after producing commodities using his/her own resources. Although the farmer relies on information from other farmers who visit the market, this is an ad hoc approach which, for some reason, is most popular and constitutes 40% of the trading systems.
  2. The farmer gets into a marketing contract with a trader who comes to collect commodities when ready at the farm and remit the farmer’s payment after selling the commodity. This is the second popular arrangement (20%)
  3. The farmer agrees with the trader who comes to pay for the commodities at farm gate, guided by prevailing market prices. In most cases the trader will have agreed with the farmer to ring-fence the commodity through paying a deposit (Hallo).  This accounts for 10% of the entire contracts in the market.
  4. The farmer produces through sponsorship or partial-sponsorship from the trader in the form of inputs like seed, chemicals and fertilizer (15%).
  5. The farmer produces commodities with guidance and knowledge from the trader in terms of shortage periods for particular commodities and other critical factors. When s/he brings commodities to the market, the farmer does not get into the market but gives commodities to the trader who pays the farmer promptly. The trader goes on to sell using his/her networks while the farmer goes back to do what s/he is good at   and the relationship continues.  This accounts for 15% of the contract arrangements and overlaps with others like

Major commodities produced under the above contractual arrangements include tomatoes, butternuts, cucumber, green beans, carrots, onions and, water melons especially from dry regions.

Large scale commercial scale contracts between farmers and mass markets

  1. The farmer produces using his/her own resources and traders come to fetch from the farm. Commodities that are traded under this marketing contract arrangement include potatoes, cabbage, tomatoes, green mealies, onion, butternut, cucumber and sweet potatoes.
  2. The farmer produces and the trader secures the commodity with a bit of money to ring-fence against other buyers. The trader can put some inputs and get paid after selling.
  3. In addition to assisting the farmer to produce through market-driven guidance, the trader sponsors the farmer through inputs and pays for commodities at the farm gate. This arrangement builds strong relationships between the farmer and the trader.
  4. The farmer produces and gives commodities to the trader who has a market stall in the market. The trader pays the farmer as commodities are sold.

Both large scale commercial and smallholder contractual arrangements are not based on legal documents but trust and relationships built over time. Value chains built through these contracts support specialization.  Each farmer ends up doing what s/he is good at in order to satisfy demand and orders. The market and related contractual arrangements create pathways for generating and sharing knowledge. This avoids cases where one farmer comes to the market with no idea of who to talk to and how prices are set as well as sources of knowledge.  Unless policy makers understand some of these issues, it is easy to disrupt food systems in times of crisis like the COVID19 and expose the majority to malnutrition.

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

Clear benefits of containerization in African Agriculture

Post-harvest handling and storage of agriculture commodities remains the biggest challenge for the majority of African smallholders. Unfortunately most solutions being pushed are designed to get surplus commodities moving quickly from farming areas to the market and consumers. Solutions that enable farmers to hold onto their commodities and sell profitably rather than be pushed to sell by the condition of the commodity are largely missing. This is where containerization become a solution.

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There is a limit to the quantity of commodities a farmer can store at home and that determines production levels as each farmer ends up producing in line with storage capacity.  Even where conditions are suitable for doubling productivity, farmers hesitate to increase production because storage capacity cannot be equally doubled. On the other hand, most smallholder farmers keep their food and harvests in their kitchens, living rooms and bedrooms. The condition of such commodities can only be good for household consumption, not the market.  Commodities stored in houses and small granaries are obviously too little even for the local market.

Commodities than can benefit from containerization

Setting up containers at village level will help in aggregating commodities and provide a sense of the collective volume of commodities from one area. Commodities that can be stored in containers include the following:

Onions – Apart from drying, storage is one of the main challenges around onions.  That is why supply is so erratic in many Southern African countries including Zimbabwe.  Poor storage leads to rotting, loss of quality and reduced shelf life.

Butternuts – During gluts, butternuts can sell for 22c/kg and in periods of scarcity they go for 72c/kg.  This variation is not good for the consumer and the market although it may be good for a few farmers who may have butternuts during scarcity periods. Containerization and warehousing can solve a lot of these supply and demand mismatches.

High value commodities (red, yellow & green peppers) – Some of these may not be produced in winter and during off-season their price can go as high as $2/kg.  Containerization and storage will ensure an even flow of these commodities into the market, avoiding wild price variability.

 Carrots – These can also be stored for consistent supply.

Fruits (apples, oranges and peaches) – These tend to run out completely and can be stored when in season for release when out of season.

Dry crops (groundnuts, sugar beans and others) – These can also be stored for release as and when the market wants them, especially when better prices start prevailing. Prices of sugar beans tend to go up towards the rainy season as most people purchase them for seed.

Sweet potatoes –Given that most smallholder farmers store this crop in the field, storage facilities can quickly release land for other uses or for preparation processes like liming so that the next crop is planted on time.

Small grains – These can also be stored for both human and livestock consumption.  An increase in the production of indigenous chickens is driving the demand, hence production, of small grains.

Enabling market readiness

A critical look at storage will give African agriculture a different picture.  It should not be just about addressing insects and rushing commodities to the market. In most cases, commodities are produced when the market is not ready. Therefore containerization is a critical stage in enabling market readiness. The majority of farmers do not have storage facilities or sheds and do not have money to invest in such important infrastructure.

Volumes of commodities produced by smallholder farmers make it less cost effective to invest in storage or take the few commodities to the market individually. Unfortunately, most investments in post-harvest technologies by governments and development partners have focused on grain storage like metal silos, ignoring other foods such as horticulture that are a critical part of the food basket.  Investment in infrastructure will help producers, consumers and many other value chain actors.

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

Using infrastructure to unlock the value of African agriculture

African agriculture requires banks with a vision to invest in infrastructure which can be used by farmers to anchor production in ways that simplify loan repayment. For instance Vision 2030 should have financial products that speak to a 10 year horizon. Financing inputs is just like providing consumer loans which do not have a growth path. In the event of a drought inputs and all resources are wasted as farmers are not able to repay loans.

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There is no longer any doubt that African agriculture requires long-term finance focusing on infrastructure starting from the markets. A fundamental question is: What are the infrastructure needs of the market. In much of Africa, more than 90% of commodities from smallholder farmers go through informal markets. Consequently, infrastructure needs of smallholder farmers who are the majority of food producers in most African countries should be tracked and addressed.

The power of feeder roads

In as much as financial institutions and government programs can provides inputs to distant rural areas like Gokwe, Hurungwe, Muzarabani and Rusitu, among others, in the case of Zimbabwe, poor road networks in these areas have negative implications on loan repayment as commodities produced by farmers fail to reach the market in a good state. Financial institutions should invest in road infrastructure including aggregation facilities in production zones. That investment can eventually evolve into a strong financial model built on numbers. Given that many smallholder farmers do not qualify to get big loans as individuals, investment in good feeder roads can enable tracking of commodity volumes, supply corridors and their performance. This is critical in forging pathways for financing value chains.

 Infrastructure as foundation

Building a firm foundation for transformative agriculture should see financial institutions investing in dam construction and borehole drilling at farmer level.  This can also be a pathway for weaning off farmers to be self-depended and release pressure from depending on loans or unfavourable contract farming arrangements.  Starting with inputs and operational costs when there is no foundation is not the correct way of investing in agriculture. Productivity is driven by infrastructure which enables farmers to utilize water, pastures and other resources.  A strong production sector is driven by sound infrastructure.

Institutional arrangements for financing the Bottom of the Pyramid

To the extent traditional forms of collateral have become a barrier to financial inclusion and unlocking the value of African agriculture, the Bottom of the Pyramid can only be financed through institutional arrangements or under an institutional umbrella like mass markets whose contribution to economic growth and nutrition security is now beyond question but are not being supported financially.

There is definite need for sustainable financing models to support informal markets as public institutions. Acting as a broker, such an institution can provide technical assistance to market operations along business lines as more of project managers. On the other hand, there is scope for strengthening relationships between local authorities like municipalities and banks.  While some local authorities could be accessing bank loans to buy water treatment chemicals, they are not getting loans for revamping food markets which are viable sources of revenue.

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

Which sources of information can transform African Agriculture

All over the world, information sources are no longer just important for journalists. African policy makers who really want to transform their agro-based economies cannot afford to remain silent about their sources of information. There is emerging consensus to the effect that information from academic institutions, private companies and development agencies is not enough for transforming agro-based African economies. The need for alternative sources of information has never been greater.

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How reliable is information from formal institutions?

In as much as it may be easy to get information from formal institutions there is no longer guarantee that such information sources provide their best ideas and strategies for transforming African agriculture. To the extent, the private sector is often reluctant to get some of its strategic information into the public domain, policy makers have to devise creative ways of accessing useful information from private actors.

On the other hand, the majority of African economies are not yet formally institutionalized but dominated by SMEs, informal markets and smallholder farming communities. It follows that if formal informants constitute about 25% of agricultural transformation information sources, 75% of the most useful information is within smallholder farmers, SMEs and other actors who are not part of formal institutions. While it may be easy to get information from commercial farmers as opposed to smallholder farmers who are not formally institutionalized, how can African policy makers tap into informal sources of information and enrich their policies with undocumented initiatives and experiences from different ecosystems?

For instance, it is important to know how financial inclusion is understood by informal markets and smallholder farmers. While banks may think financial inclusion is about opening branches in farming areas, farmers may understand financial inclusion as wealth creation through interest on savings in a bank.  A useful starting point is understanding existing relationships between financial institutions and farmers if financial institutions are to make a financial difference to ordinary lives.

The role of rapid assessments

Rapid assessments are some of the under-rated methods and pathways for collecting information from economies that are not formally institutionalized.  That is how we can get information on mechanisms through which SMEs, smallholder farmers and marginalized communities are surviving and coping with climate change as well as absence of reliable financial systems.  A rapid assessment opens avenues for accessing fluid information that can be used to develop local communities and continuously review strategies in a fluid manner than can be achieved through static documents.

Every new intervention is getting into communities where things are already happening. Rapid assessments pave pathways for continuous sharing of information and knowledge. Farmers who contribute information at the start of the intervention want to continue contributing to what makes sense in solving their challenges.  A product can only impact the market if it is informed by potential customers.  A cue can be taken from African informal mass food markets where packaging and measurement is informed by clients who indicate their preference for different types of measurements such as baskets, boxes, bundles, 20l tins and many different measurements and packaging material depending on commodity.

Much of the content from rapid assessments should constitute experiences of farmers and other value chain actors in different ecosystems. In some cases, government needs technical assistance in conducting rapid assessments because some of the information collected is private property that has to be converted into business models. Weaving business models is often a domain for private organizations and social entrepreneurs. For instance, early warnings from the market can only be generated by private actors like SMEs and processors.

Based on a competitive mind-set, some private companies may share knowledge selectively. However, public sources of information like mass markets can provide valuable information because they have a much broader exposure to many actors and their impacts.   While the public sector has more data than the private sector, such data is often in unusable and inconsistent formats.

It is through rapid assessments that policy makers can see that smallholder farmers cannot produce solely for value chains and manufacturing but other important linkages have to be understood.  Other enabling factors for smallholder farmers to thrive, not just value chain approaches being pushed by NGOs and the private sector become visible.  Policy makers will also begin to realize that it is not just about yields but the entire ecosystem. While development agencies may want to move smallholder farmers from agriculture to manufacturing, local markets demonstrate their relevance for social cohesion and local food security. Unless policy makers broaden and deepen their sources of information this evidence will remain invisible and unused.

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

Ten guiding principles for yoking infrastructure and ICTs in African Agriculture

There has been a general tendency by developing countries to cherry-pick and deploy some components of Information and Communication Technologies (ICTs) in the agriculture sector. Combining infrastructure and ICTs could play a more catalytic role than just using ICTs for promoting extension services. If African countries are going to produce sufficient agricultural commodities, how can ICTs and infrastructure and ICTs fuel economic growth and the best Return on Investment for farmers?

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Guiding principles

  1. Making leadership support visible – What type of support is leadership providing for infrastructure and ICTs? Leadership should be visible. A national agricultural budget should have a clear allocation for infrastructure and ICTs along entire value chains, not just on the production node.
  2. Shared language –   When talking about policies, currency, monetary policy, how are many value chain actors contributing? If the majority of value chain actors do not understand what is happening due to complicated terminologies, implementation will not bear positive fruits.
  3. Create space for many value chain actors – Many African countries are still using colonial terms like informal, smallholder, middlemen, Koronyera and other derogatory and demeaning terms to classify economic actors. Each actor’s role should be cleared defined in ways that reveal contribution to the economy. The existence of traders and informal markets has a meaning that needs to be understood. They would not be available if they did not meet a need.
  4. Simplify contribution pathways – Many farmers and other value chain actors do not contribute to talk-shows and conferences where their circumstances are discussed.  What forms of media can enable farmers and traders to contribute? How can ICTs help?
  5. Focus on action – Most policies end at policy level with no actionable stems. Catalyzing is about action.
  6. Simplify connection – What are the pathways of creating networks?  Currently in much of Africa, NGOs are doing their thing, farmers are on their own, companies on their own and government departments on their own. There are no sustainable connectivity pathways.
  7. Challenge the mindset – Traditional mind sets have held sway for generations and that is limiting innovation. For instance, the notion of irrigation schemes needs revamping in people’s mindset if it is to integrate modern infrastructure and ICTs. So far irrigation development is associated with sophisticated machinery only and irrigation schemes. For how long will elders continue associating social media with the youth when it has several positive uses that should be harnessed?
  8. Recognition and constructive feedback – accepting constructive criticism and acknowledging other actors’ contribution can incentivize knowledge sharing.  Someone should be awarded a prize for sharing knowledge through ICTs just as farmers win accolades for achieving higher yields.
  9. Preserving community status quo – Interventions like food aid tend to disrupt the status quo and social fabric in many communities.  For instance, when villagers and farmers start receiving United States dollars to go and buy their food in a community where foreign currency is not a major medium of exchange, social norms and cohesions are weakened because using foreign currency at community level is not part of a resilient strategy.
  10. Track and capture added value along value chains – What value is each intervention adding?

 

Charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430